EXCLUSIVE Q&A: POWER BILLS JUMP 30% IN KEY WEST & LOWER KEYS

Keys Energy Services answers questions

Keys Energy Services, the Lower Keys’ electric utility, on Wednesday announced a sudden 30% spike in June power bills due to the skyrocketing cost of natural gas. And they could go even higher.

An average residential customer in May paid $162 for 1,000 kilowatt hours of electricity. The same customer, using the same amount of power, will pay $210 in June — a 29.9% increase, according to Keys Energy Services (KEYS), which serves customers from Key West to the Seven Mile Bridge. The amount of the increase will vary according to the amount of electricity a customer uses.

The increase will appear on bills as a “Power Cost Adjustment,” or PCA, which was $26 per 1,000 kilowatt hours in May, and is $75 for June. “The cost of natural gas had been at record lows in recent years, and these savings were passed along to our customers in the form of a credit,” said Lynne Tejeda, KEYS’ general manager & CEO. “The price of natural gas has surged over the last year and what had been a credit has escalated to a charge. If the cost of natural gas climbs higher, KEYS will pass those costs on through the PCA charge.”

Tejeda cited disruptions in natural gas production, reduced rig counts during the pandemic, lower gas storage inventory, and the exporting of fuel as a result of the war in Ukraine as reasons for the natural gas price increase.

“We’ll be monitoring the costs carefully and working with our power supplier to mitigate these increases,” she added. 

Keys Weekly had questions about the unexpected jump, and heard from several Key West residents and Keys Energy customers, who had additional concerns.

Julio Torrado, spokesman for KEYS, answered them all:

Q: When did the elected utility board learn of the possible increase? When did the board approve it? (Editor’s Note: The 5-member Utility Board of Key West is elected by KEYS customers from Key West to the Seven Mile Bridge. Current board members are: Mona Clark, Tim Root, Robert Barrios, Pat Labrada and Steve Wells. As of Friday, June 17, Clark, Barrios and Wells faced no opposition in the 2022 election and are thus reelected.)

A: The Utility Board has discussed increasing the power cost adjustment (PCA) during the budget process in August and September 2021, when the PCA step-up increases for November 2021 and January 2022 were anticipated. Most recently, the Utility Board was briefed on the pending increase during their regular meeting on Wednesday, June 8. During the meeting General Manager & CEO Lynne Tejeda explained that we were anticipating a significant power bill on Friday, June 10. During the meeting it was projected that the PCA would have to be set at $64.95 per 1,000 kwh, but when the actual bill arrived, the PCA had to be set at $74.95 per 1,000 kwh to recover the necessary costs. 

Q: Why can’t Keys Energy spread out the increase over time? 

A: Spreading out the increase over time is not feasible because natural gas prices continue to rise. Delaying the increase, or spreading it over time, will compound the burden and adversely impact future rates and future ratepayers.

Q: Is Keys Energy offering any assistance programs for customers? 

A: KEYS is not currently offering assistance programs, but there are various ways customers can seek assistance. Visit keysenergy.com/payment-options and click on the Payment Assistance tab to see agencies that may be able to help.

Q: Will there be any increased flexibility with regard to shutoffs or late fees? 

A: KEYS is not currently offering any additional payment flexibility options. That being said, communication is important. Any customers who are fearful of not being able to pay their electric bill should contact our Customer Services department to discuss options.

QUESTIONS/COMMENTS FROM CUSTOMERS (Please respond where appropriate.)

“They have us over a barrel. It’s not like we can ‘take our business elsewhere’ as we would if a restaurant jacked their prices 30%.”

KEYS: We are controlling our controllable costs. The recent increase in electric bills is 100% the result of increased power costs. This is a pass-through cost and KEYS does not benefit in any way from it.

“They do great w/storms. I’ll give ‘em that. Love those guys, but I guarantee they’re not going without a raise.”

KEYS: The PCA is a pass-through cost to customers. KEYS does not benefit in any way from it, nor does the PCA fund salaries. Per negotiated contract, employees received a 4.5% raise this year. Next year the contract calls for a 1% increase.

 “How can an essential utility with no competition impose such an extreme increase and unexpected hardship? Are they even TRYING to work with people?” 

KEYS: The recent increase in electric bills is 100% the result of increased power costs. This is a pass-through cost and KEYS does not benefit in any way from it. KEYS is not currently offering any additional payment flexibility options. That being said, communication is important. Any customers who are fearful of not being able to pay their electric bill should contact our Customer Services department to discuss options.

 “Gonna be a hot summer if folks can’t afford A/C. I’d sleep in my car, but I can’t afford gas either.”

 “This ain’t right. It’s summertime.”

 “This doesn’t just affect our own household power bills. Hotels, grocery stores, restaurants & government buildings all use a ton of power. When their costs go up, so do their prices. At some point, something’s gotta give. Consumers can’t afford to foot everyone’s bills.”

 “I guarantee they’re still getting fat raises at City Electric. How big was their raise this year? When’s the last time they tightened THEIR belts?”

KEYS: This didn’t come up in the comments, but we are getting questions about why KEYS is not investing more in solar. The answer is, we are. In 2018, we made a commitment to the Florida Municipal Solar Project. As planned then, by the end of 2023 we were slated to have 10% of our power generated from solar farms in the state of Florida. We are currently getting a small percentage of solar power from phase one of the project, but given current supply chain issues in procuring solar panels, the full amount of power we committed to purchase is not slated to come online until December 2023, at the earliest. Also, within the next few months that Board will be reviewing bids to make additional commitments to the Florida Municipal Solar Project and grow our solar percentage.

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Mandy Miles drops stuff, breaks things and falls down more than any adult should. An award-winning writer, reporter and columnist, she's been stringing words together in Key West since 1998. "Local news is crucial," she says. "It informs and connects a community. It prompts conversation. It gets people involved, holds people accountable. The Keys Weekly takes its responsibility seriously. Our owners are raising families in Key West & Marathon. Our writers live in the communities we cover - Key West, Marathon & the Upper Keys. We respect our readers. We question our leaders. We believe in the Florida Keys community. And we like to have a good time." Mandy's married to a saintly — and handy — fishing captain, and can't imagine living anywhere else.